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2007 Operating Expenses Survey

NEWS RELEASE

February 2008

2007 OPERATING EXPENSES SURVEY

Property Council New Zealand’s annual survey of operating expenses is an industry benchmark that reports on all major operating expenses for commercial buildings and shopping centres, providing median annual expenses, ranges of costs and time series analysis of selected expenses. The 2007 survey, investigating operating costs in 85 office buildings and 29 shopping centres with a total rentable floor area in excess of 1.26 million square metres, has recently been completed and is now available.

OFFICE BUILDING OPERATING EXPENSES

Office Buildings – by Location Auckland CBD Office buildings recorded a median total operating cost of $96.13/m2, a sizeable increase from last year’s $87.44/m2, making this category the most expensive in the country. The median cost for Wellington CBD Office properties dropped slightly to $68.36/m2 from $71.01/m2 last year. Auckland Non CBD Office buildings recorded a very slight drop, to $58.78/m2 from $60.81/m2 in 2006. Median cost for Hamilton Office buildings was $48.35/m2, increase from last year’s $44.65/m2.

Rates

In each city rates were the highest single expense of all categories tracked. In Auckland, rates for CBD Office properties were $33.02/m2 (compared to $34.37/m2 last year), while the median Non CBD Office rates were $17.92/m2 (up from $17.84/m2).

Wellington CBD Office rates were $25.96/m2 (compared to $24.46/m2 last year). Hamilton Office rates were the lowest in the country at $9.02/m2 (up from $7.82/m2).

Insurance

Both Auckland CBD and Wellington CBD Office buildings have experienced decreases in insurance costs this year compared to 2006.

The median Wellington CBD Office insurance expense decreased 20.4% from last year’s figure. This continued to be a significant cost for Wellington properties as the third highest expense of all categories tracked. The median Auckland Non CBD Insurance cost was up 39.0%, while the median cost for Auckland CBD and Hamilton Offices changed little from last year.

Total Energy

In all categories total energy is the most significant of all ‘operations’ expenses. While there was little change in the median cost for Auckland non CBD and Hamilton Office, there have been significant increases in the two CBD categories. Compared to the 2006 figures, the median Auckland CBD Office cost is up 47.0%, and the median cost Wellington CBD Office is up 22.2%.

Office Buildings – by Quality Grade

When analysing the CBD Office results by quality grade, the total operating costs remained virtually unchanged. The median cost for New Zealand CBD Office ‘A Grade’ properties was $114.63/m2, up 0.25% from last year. ‘B Grade’ properties rose 3.85% to $76.59/m2, and ‘C Grade’ properties were 3.15% lower at $60.02/m2. Rates, insurance and total energy were generally the major contributors to the total cost in each quality grade.

ENDS

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